Governance and risk management

Corporate governance

RAI Holding B.V. is a private limited company in accordance with Dutch law. Shares in the company are held by the RAI Association and the City of Amsterdam. The governance structure is based on Book 2 of the Dutch Civil Code, the statutes of RAI Holding B.V. and various internal regulations. The governance structure of RAI Holding B.V. includes a general meeting, Supervisory Board, Executive Board and works council.

Legal structure

RAI Holding B.V. is a holding company. The companies that are part of RAI Holding B.V. are listed in the ‘General’ section of the Financial Statement under ‘Principles of consolidation’. Wherever this annual report states ‘RAI Amsterdam’ it refers to RAI Holding B.V. and all its group companies. Group companies are participations in which RAI Holding B.V. plays a policy-deciding role.

RAI Holding B.V. and its group companies

Statutes

The most recent statutes of RAI Holding B.V. are dated 18 July 2008. The latest statutes of subsidiary RAI Amsterdam B.V. are dated 2 June 2015. The modification of the statutes in the financial year was related to the change from Amsterdam RAI B.V. to RAI Amsterdam B.V.

name change; modified statutes published on website

Corporate Governance code

The Executive Board and Supervisory Board recognise the Dutch Corporate Governance code as determined by the Corporate Governance Code Monitoring Committee in 2008 and implemented on 1 January 2009. They apply the principles and best practice definitions therein, insofar as they apply to RAI Holding B.V. In some cases the principles and best practice definitions do not apply because RAI Holding B.V. is not quoted on the stock exchange and only has two shareholders.

Nonetheless, the code is fully recognised and applied where applicable. Any substantial change to the corporate governance structure of RAI Holding B.V. and compliance with the code will be presented to the General Meeting as a separate agenda item.

code fully recognised and applied where applicable

The following recommendations from the code are not applied (in full):

Publication of notes on general remuneration on website
The provision that the written notes with a proposal for the approval or authorisation by the General Meeting be placed on the company’s website has not been applied due to the fact that the company only has two shareholders;

Publication of policy for bilateral contacts with the shareholders on websiteThe provision that the company formulate an outline policy regarding bilateral contacts with the shareholders and publish this policy on the website has not been applied due to the fact that the company only has two shareholders.

'not applied'

Governance of Supervisory Board

The Supervisory Board regulations were re-determined on 22 September 2015. They are based on Article 16, section 4 of the company statutes and serve as a supplement to the regulations and instructions that apply to the Supervisory Board in accordance with Dutch legislation and company statutes. The task division of the Supervisory Board and its working methods are included in the regulations. The Supervisory Board regulations are published on the website of RAI Amsterdam (www.rai.nl).

The task of the Supervisory Board is supervising the policy of the Executive Board and the general course of affairs within the company and the associated companies. In addition, the Supervisory Board acts as employer to the Executive Board and assists it with advice. In fulfilling its duties, the Supervisory Board is focused on the interests of the company and the associated companies, taking into account the relevant interests of all those involved in the company. The Supervisory Board is also responsible for the quality of its own activities.

supervising and realising employer and consultancy role

Size and composition

RAI Amsterdam has a Supervisory Board consisting of five people. Members of the Supervisory Board can be appointed for a maximum of three consecutive terms of four years each. A member must leave the Board at the latest on the occasion of the first general meeting after his or her last term has ended.

five members, three four-year terms at most

The profile is related to the composition of the Supervisory Board. It is discussed at the general meeting and with the works council whenever there are any changes. The profile is published on the website of RAI Amsterdam (www.rai.nl).

profile and composition

The Supervisory Board is composed in such a way that, in accordance with the governance code, its members can function independently and critically with regard to other members, the Executive Board and any other partial interest. Each Supervisory Board member should be able to evaluate the outlines of the total policy. Additionally, all members have a specific expertise and related competences required for fulfilling their duties. The Supervisory Board aims to be composed in such a way that continuity is guaranteed and membership well-balanced with regard to the age, experience and male/female ratio.

independent and critical functioning

Committees

As the Supervisory Board in its complete configuration has more than four members, there are three core committees (in accordance with the regulations), namely an Audit Committee, Remuneration Committee and Selection and Appointment Committee. The committees are established and composed by the Supervisory Board. The (full) Supervisory Board remains responsible for all decisions, whether or not they were prepared by one of the committees. The regulations of the committees are published on the website of RAI Amsterdam (www.rai.nl). The composition of the committees is indicated in the Statement of the Supervisory Board, under ‘Committee reports’.

three committees

Step-down roster

The step-down roster was determined based on Article 6, section 2 of the Supervisory Board regulations. A Supervisory Board member will step down at the latest at the first General Meeting held four years since his or her last (re)appointment as Supervisory Board member. The roster is included below and continuously published on the RAI Amsterdam website (www.rai.nl).

maximum of three four-year terms

Step-down roster

Maximum of three terms

Step-down roster

Name

Date of first appointment

Current term

Upcoming proposal for stepping down or (re)appointment: first General Meeting after:

Final date for stepping down: first General Meeting after:

R.H. (Roelf) de Boer

23/04/2015

1st

23/04/2019

23/04/2027

A.M.H. (Annemarie) van Gaal

15/09/2015

1st

15/09/2019

15/09/2027

J.W.Th. (John) van der Steen

07/04/2011

2nd

07/04/2019

07/04/2023

vacancy 1

vacancy 2

Training course

After appointment, every member of the Supervisory Board follows an introductory programme developed and financed by RAI Amsterdam which focuses on general financial and legal affairs, financial reporting by the company, specific aspects of RAI Amsterdam and its business activities, and the responsibilities of the Supervisory Board.

introductory programme for new Supervisory Board members

Once a year, the Supervisory Board also discusses any desirable/required (additional) education during the terms of the individual members.

supplementary education and training

Conflict of interests

See notice in the statement from the Supervisory Board.

Remuneration

The Supervisory Board members were not provided with shares and/or options or similar rights for obtaining shares in the capital of the company, nor did they acquire any loans and/or securities. The remuneration is described in the financial statement under ‘information on the consolidated financial statement.

no personal loans and/or securities provided to Supervisory Board members

Executive Board governance

The regulations for the Executive Board were last changed on 25 June 2014. They are based on Article 13, section 3 of the company statutes and serve as a supplement to the regulations and instructions that apply to the Supervisory Board in accordance with Dutch legislation and company statutes. The task of the Executive Board and its working methods are included in the regulations with which the Executive Board aims to comply with the Dutch Corporate Governance Code. The Executive Board regulations are published on the RAI Amsterdam website (www.rai.nl).

Executive Board members are, in principle, appointed for a period of a maximum of four years. They can be reappointed for another period of four years at most.

appointment for two four-year terms

Conflict of interests

See notice in the statement from the Supervisory Board.

Remuneration

The Executive Board members do not receive any shares and/or options or similar rights for obtaining shares in the capital of the company, nor did they acquire any loans and/or securities. The remuneration is indicated in the financial statement (statement under ‘information on the consolidated financial statement).

no shares, options, loans or securities provided

Employee governance

Code of Conduct

RAI Amsterdam is aware of its social role and the resulting responsibilities towards all parties. The actions of RAI Amsterdam and its employees are founded on the core values and business principles formulated by RAI Amsterdam. The Code of Conduct provides clarity by describing standards related to the actions of everyone who represents RAI Amsterdam. The instructions given by the code of conduct are unconditional and not influenced by financial goals. The Code of Conduct was implemented on 1 September 2006 and is published on the RAI Amsterdam website (www.rai.nl).

applicable standards

Whistleblower scheme

The whistleblower scheme determines how employees can report suspected violations to their employer. The scheme details the procedure to be taken by the employer and determines that employees who report suspected violations and who act in accordance with the provisions and in good faith will not be put at any disadvantage in their position as a result of any report. The whistleblower scheme was implemented on 1 September 2006 and is published on the RAI Amsterdam website (www.rai.nl).

procedure for reporting suspected violations

Risk management

RAI Amsterdam has systems in place for risk analysis and control. The company distinguishes between strategic, financial/administrative and operational risks. Strategic risks are related directly to events that can structurally undermine the position of the company, operational risks are related directly to business activities, and financial/administrative risks are associated with developments in the financial market and financial & administrative management.

Risks

We recognise five strategic risks:
S-1 exploitation risk: the risk that one of the RAI’s own titles has to be cancelled
S-2 risks related to letting to third parties
S-3 traffic: the accessibility of RAI Amsterdam (city of Amsterdam, Schiphol)
S-4 exploitation risk: the risk that a third party event is cancelled
S-5 security against terrorism

We recognise 18 operational risks:
O-1 safety while working in the halls
O-2 construction risks: risks not covered by licenses that can occur when placing temporary installations and structures
O-3 major health risks (Legionella)
O-4 hazardous substances
O-5 hygiene and food
O-6 product liability related to RAI services
O-7 crowd control (e.g., in case of fire)
O-8 national strike
O-9 failure of installations essential to an event (cooling, heating, power etc.)
O-10 failure of in-house operational ICT systems (administration, operations)
O-11 failure of event network for exhibitors
O-12 third party demands on the ICT infrastructure and public services at RAI Amsterdam grow faster than RAI Amsterdam is able to upgrade/expandO-13 organisers, exhibitors and/or visitors use the (public) infrastructure differently than expected, resulting in major disruptionsO-14 lengthy malfunction of ticket websites (huishoudbeurs.nl, metstrade.com etc.)O-15 database integrityO-16 privacy violations as a result of data misuse O-17 data theft byhackersO-18 presence of asbestos in old building

operational risks

Risk evaluation method

Evaluating the actual risks for RAI Amsterdam involves both the current risk of an incident occurring and the current consequences (measured in financial terms) this might have on RAI Amsterdam.

current risk and consequences

The combination of the current risk and current consequences determines whether the current risk level is seen as low, medium or high. The evaluation explicitly takes into account the prevailing monitoring procedures and measures/actions taken to mitigate the intended risk. The determination of risk and consequence is indicated in the matrix table. The letters in the matrix indicate the type of risk, with S representing strategic risks, O operational risks, and F financial/administrative risks. The associated numbers refer to the risks as indicated above. The colours represent the following risk levels: low risk level (blue) medium risk level (grey), and high risk level (red).

evaluation of risk impact

Risk matrix

Risk and consequence determine risk level

Risk matrix

RAI Amsterdam’s Executive Board assesses risk readiness. RAI Amsterdam has a maximum risk appetite of €10 million. If an impact of this magnitude should occur, the company will have a sufficient buffer to deal with the effects.

risk appetite

The risk management system did not change in 2016 with respect to 2015.

risk management system

As the matrix indicates, only a few strategic risks receive the high-risk designation. These are:
S-1 (exploitation risk: the chance that one of RAI’s own large exhibitions will be cancelled)
S-4 (exploitation risk: the chance that a large exhibition organised by a third party will be cancelled)
S-5 (security against terrorism).

The situation is the same as in 2015.

Discussed with the Supervisory Board

The risks, internal risk management and control systems along with the realised and planned actions were discussed in the September meeting of the Supervisory Board.

Internal risk management and control systems

Below is an overview of which checks and actions were undertaken related to the three largest risks with regard to their impact on RAI Amsterdam:

The risks related to RAI events (risk: medium, consequences: severe) are related to the interests of exhibitors and visitors and influenced by economic conditions (an example in the negative sense is when the AutoRAI was cancelled in 2013). These risks are limited by deploying dedicated, specialised teams for each of the RAI-organised events. The teams have a great deal of knowledge and wide range of contacts in the relevant markets and trade associations, ensuring that they remain fully informed on all event-related developments and are able to stimulate the participation of major exhibitors.

limiting risks related to RAI events

An important action to minimise these risks is the portfolio transition: being less dependent on one sector and expanding the portfolio internationally.

Strengthening the brands by rolling them out internationally and offering relevant solutions is another way to mitigate these risks. Advanced database marketing further contributes to limiting the risk of disappointing visitor numbers.

To prevent a large third party-organised exhibition or conference from being cancelled (risk: low, consequences: severe) relation management of the A accounts has been placed at the Executive Board level. Long-term contracts are implemented where possible. To minimise the consequences of the cancellation of a large third-party title on the results of RAI Amsterdam, priority (time and funds-wise) is given to attracting alternative exhibitions and conferences for the future.

limiting risks related to third party events

A risk analysis is performed for every large event to determine the security level. Investments in hardware and organisation to protect against calamities have been finalised.

calamities

There is no risk linked to share prices as RAI Holding B.V. does not hold any shares listed on the stock exchange.

share price risk

Liquidity risk refers to the danger of having insufficient funds to cover direct obligations. Active monitoring of cash flow and setting up of a multi-year forecast which assesses the cash flow and thereby forecasts the available liquidity limits the liquidity risk to which RAI Amsterdam is exposed. If the liquidity risk increases, RAI Holding B.V. has formulated measures which lead to an immediate lowering of expenditures.

liquidity risks

There are no major currency risks given that the operational cash flows and financing activities are principally denominated in euros.

currency risks

Interest rate risks relate mainly to loans taken out for the long term. RAI Amsterdam B.V. hedges the interest rate risk by fixing interest rates through interest rate swap contracts: such contracts were concluded in 2013 for the period up to 2020 for an amount of €48 million at the end of 2016. RAI Amsterdam B.V. pays an interest rate of 1.54% on the interest rate swap it signed with Deutsche Bank AG/Coöperatieve Rabobank Amsterdam U. A. On bank overdrafts the RAI pays a variable rate of three months Euribor plus an individual surcharge. The amounts hedged through interest rate swaps are smaller than or equal to the outstanding principal amount of the loans from Deutsche Bank AG/Coöperatieve Rabobank Amsterdam U. A. The interest rate swaps had a fair value of negative €2,696,262 (2015: negative €2,969,000) on 31 December 2016. The nominal value of the interest rate swaps will be decreased during their remaining life (to 2020) down to zero.

interest rate risks

The current financing agreement will last until 2020. The uncertainty about the possibilities to attract financing is mitigated by maintaining an active relationship with providers of loan capital, a proven track record of maintaining the agreed ratios, and keeping to a clear strategy. The current financing agreement, which runs up until and including 2020, will be followed up long before it expires.

uncertainty about possibilities to attract financing

RAI Amsterdam has a tender board which tests all purchase orders above a given threshold amount for compliance with regulations and, where necessary or desirable, formulates calls for tender.

competition rules

RAIAmsterdam has various event-related permits and the following certificates: ISO-9001 (quality management), ISO-14001 (environmental management), ISO-20121(sustainability of events)and OHSAS-18001(occupational health and safety). A unique cooperation with the City of Amsterdam has meant that RAI Amsterdam is the first private company in the Netherlands to be given theauthority to regulate and enforce event-related permits in a number of fields. To ensure compliancewith legislation,RAI Amsterdamhas an internalpermit office which is charged with applying the policy and issuing and enforcing permits.

environmental legislation

To ensure compliance with tax laws, RAI Amsterdam makes use of advisors, some of whom are affiliated with the accountant and some who are not, who assess RAI Amsterdam’s processing of tax legislation. The two most important types of tax for RAI Amsterdam are VAT and corporate tax.